April 15, 2013

Get Rich or Deny Trying

How to make millions off Obama

One of the stars of Barack Obama’s 2012 State of the Union address was Jackie Bray, a single mother who was laid off in 2011 and struggled for months to find a good-paying job. Bray’s luck finally turned, the president explained, when German industrial giant Siemens hired her at a turbine factory in North Carolina. Though Bray didn’t have the skills Siemens wanted, the company partnered with a local community college to train workers like her and even covered their tuition. Before long, Bray was earning a generous wage in a job she loved, operating robotic equipment and lasers. As the president spoke, she sat next to the first lady and beamed.

It was the sort of success that cuts to the heart of Obama’s vision of government—activist but not heavy-handed. “I want every American looking for work to have the same opportunity as Jackie did,” he elaborated. “Join me in a national commitment to train two million Americans.”

It was also P.R. gold for Siemens, the kind of product placement you couldn’t buy if you wanted to. But you can certainly increase your odds. As it happens, Siemens had recently signed up Camille Johnston, the first lady’s former communications director, to be its vice president of corporate affairs. For almost two years, few people had a better chance to size up the Obamas, and Johnston put her insights to use prepping her boss at Siemens for a White House meeting. “It was the first foreign company [Obama] mentioned in a State of the Union as far as I could tell,” says a former administration official. “It’s not like it happens by accident.”

Welcome to the buckraking phase of the Obama era. If the campaign was about hope, and the early presidency was about change, increasingly the administration has settled into a kind of normalcy in which it accommodates itself to Washington far more than Washington accommodates itself to Obama. That’s not necessarily a bad thing when the resultis a bipartisan schmooze-fest at the Jefferson Hotel. But when it comes to the D.C. custom of trading a White House security clearance for a private-sector sinecure, there’s a lot to be said for not going native so easily.

Within Obamaworld, there are a few unwritten rules about how to parlay one’s experience into a handsome payday. There is, for example, a loose taboo against joining a K Street lobbying shop and explicitly trading on administration connections. And while joining a consulting firm is acceptable, those who do are reluctant to work for clients reviled by liberals: gun makers, tobacco companies, Big Oil, union busters. Above all, there is a simple prohibition against excessive tackiness. “It’s like: Don’t embarrass yourself. You were part of something special,” says a longtime Obama adviser. “I think if [Obama] were to send an all-staff e-mail, it would be along the lines of Ron Burgundy—‘Stay classy, San Diego.’ ”

Alas, not everyone chooses to obey these norms. Take Robert Wolf, a former U.S. chairman of the investment bank UBS and an early Obama fund-raiser, who has served as an all-purpose (and highly visible) “first buddy” throughout the presidency. Last year, Wolf dreamed up the idea for a firm called 32 Advisors, which would instruct clients here and abroad on a variety of business transactions, such as how to secure U.S. government financing for export deals.

The firm opened its doors in February after signing up several prominent Obama alumni, including former White House economic adviser Austan Goolsbee, who will provide “economic intelligence” as a “strategic partner,” and Kevin Varney, the former chief of staff of the government’s export-import bank (the very same agency clients will hit up for loans).1 Wolf hopes to keep the roster of companies he works with small and the interactions intimate. “We’re very exclusive,” he says. “The clients want to be serviced.” Goolsbee, for example, hosts a weekly conference call with roughly a dozen hedge funds and private-equity firms to opine on the topic of the day. He occasionally dines with one of the fund managers.

According to Wolf, the president is aware of this new venture and has pronounced himself supportive. “I had the ability to speak with him numerous times about what I’m doing,” Wolf says. “He saw my excitement, he was excited.” Like other Obamans, Wolf grasps the value of discretion when invoking the president’s name. But he is uniquely burdened by a need to talk up his access to power even while trying to downplay it: “Listen, Austan and I, we were his economic advisers during the presidential campaign. The relationship [with Obama] goes way back. Obviously, we’re very friendly. We remain close friends.” He offers all this as prologue to stipulating that the White House would never lift a finger to help him. “The president has other things to do than worrying about 32 Advisors,” he allows.

This is almost certainly true, but a quick glance at Wolf’s website suggests the indifference isn’t quite mutual. One page features a large picture of Wolf shaking hands with Obama, like a Brooklyn deli owner who knew Dean Martin way back when. There are also prominent photos of Goolsbee, whose face would be recognizable to anyone who followed the Obama campaigns. Though Wolf promises that his firm won’t lobby—anyone who asks will be referred to Washington fixer (and strategic partner) Heather Podesta—the text of the website advertises a “broad network of relationships” to help clients “open and sustain the lines of communication with political, business and financial leaders.” None of this has gone unnoticed in Obamaworld. “There are those of us who e-mailed it to each other to laugh about it,” says a former White House official. “It’s stunning.”

Associated Press

TOMMY VIETOR

Formerly: National Security Council spokesmanCurrently: Founder of Fenway Strategies, a consulting firm

The irony is that such tackiness is unnecessary. There are more than enough ways to cash in on a White House tour of duty that fall comfortably within the red lines governing Obama’s Washington. No one in the West Wing, from the president on down, would begrudge former colleagues the chance to make a buck so long as a modicum of tact is displayed.

The easiest place to accomplish this is at a Washington consulting firm that takes on corporate clients. For example, a group of companies might hire a firm like SKDKnickerbocker—a popular destination among young Obama operatives, run by former White House communications director Anita Dunn—to wage a P.R. campaign for certain tax advantages over their competitors. (The New Republic was an SKDKnickerbocker client.) “Ninety-nine percent of the time it’s two big rich companies fighting over something, and you pick a side,” says a former administration official now in the consulting world.

Or a client caught in an unfortunate regulatory snag might want to know where to plead its case. “They say, ‘Listen, we have a problem with the White House. We think we should talk to Joe Smith,’ ” says the former official, describing a typical interaction. “I say: ‘That guy is a total moron. He’s not the person to talk to on this issue.’ ... It’s giving background advice to people without lobbying.”

But it turns out the highest-profile White House grads don’t so much join consulting firms these days; they found them. A boldfaced Obama name can rake in upward of $25,000 per month from a client just by dialing into a conference call and drafting a memo from time to time. Four clients means more than a million dollars a year with virtually no overhead. “You can run a business like that on an iPad and a cell phone,” says the former administration official. The godfather of this approach is ex-Clinton strategist Doug Sosnik, famous for conducting his business meetings in jeans from coffee shops and hotel lobbies.2 David Plouffe and Stephanie Cutter have both adopted the Sosnik model.

The alternative is to rent out office space and staff up, in hopes of one day growing into a consulting powerhouse. This is the Glover Park Group model, based on the firm a group of former Clinton and Gore hands opened in 2001 and nurtured into a 160-person juggernaut. Jim Messina appears to have ambitions in this vein, having procured office space and hired support staff. Former Obama press secretary Robert Gibbs, who briefly flirted with trying to return to the White House, is in the process of launching a similar firm with Ben LaBolt, the 2012 campaign press secretary.

And then there is Tommy Vietor, who started as a 23-year-old press aide on Obama’s 2004 Senate campaign and worked his way up to National Security Council spokesman before leaving the White House in March. Vietor was so far down the bench when he first joined Team Obama that the future president thought he was a volunteer for a few months. (In fact, Vietor was earning a brisk $2,500 per month.) Even as he ascended the ranks—Iowa press secretary, assistant White House press secretary—there was a level of frat-boy goofiness that made him hard to take seriously. During the 2008 general election, Vietor lived in a Chicago group-house known as “the Pad,” which became famous around Obama headquarters for its late-night Rock Band sessions. In 2010, he and then–White House speechwriter Jon Favreau made the gossip pages after being photographed shirtless while nursing beers in Georgetown.

Still, there was always something to Vietor that the skeptics missed. He was masochistically hardworking, even a bit bookish. “He reads a ton, wants to learn a ton—not everybody does there,” says a former White House colleague. “It’s OK to be a bro; it’s not a crime.” Vietor also excelled at tradecraft. “Every time you talk to a reporter, you’re not just trying to move the campaign message. You’re trying to extract information,” says Pete Giangreco, a longtime Obama adviser. “He was very good at picking things up, being careful about what he gives out.” Above all, there was his personal relationship with the Obamas, with whom he spent months on the road during the early years. To this day, the Obama daughters refer to him as “Tommy David Sam,” a joking reference to the way Sasha chronically forgot Vietor’s name when he first turned up next to their dad.

The upshot of all this is that Vietor should have little trouble landing clients at Fenway Strategies, the firm he recently started with Favreau. “I’m not going to hire Tommy Vietor here,” says a former Obama official now at a large corporation. “But a lot of people pay a lot of money in Washington to understand what’s going on in the Obama administration since, whatever else you think, they’re reasonably insular.” It’s this insularity that makes people like Vietor so valuable. “Someone who can actually help you think about this administration and this White House is worth something. Don’t discount it,” the former official says.3

Of course, this being the Obama tribe—a group of people who promised the most ethical, transparent administration in history; who gave themselves migraines by refusing to hire lobbyists (except when they did); who, during the 2008 primaries, held up the influence-peddling ex-Clintonite Lanny Davis as a shorthand for everything wrong with Washington—there is more than a little anguish over all the newfound riches. “Axe [David Axelrod] thinks all of us are lobbyists,” says one Obama campaign adviser.In conversations with other Obamans, several were willing to damn former colleagues as ethically suspect. (Naturally, they downplayed their own transgressions.)

The biggest rift separates the aides and advisers close to the campaign masterminds—Axelrod, Gibbs, and Plouffe—and those close to Anita Dunn, the de facto leader of the White House anti-boys-club faction, which also includes Obama confidant Valerie Jarrett. The division dates back to 2008 and 2009, when Axelrod and Gibbs saw Dunn as an internal rival, and it flared up more recently when Dunn described the White House to journalist Ron Suskind as a “hostile workplace to women.”

Members of the Axelrod-Gibbs-Plouffe axis chafe at the work Dunn’s firm, SKDKnickerbocker, has done for ex–Republican governor Charlie Crist and for a coalition of junk-food manufacturers. “We’re very sensitive about not working for anyone that ... might reflect poorly on the president,” says one former Obama adviser. “Other firms haven’t concerned themselves with that. Anita Dunn and SKDK worked on the sugar campaign in direct competition with the first lady’s anti-obesity campaign.”

In response, those close to Dunn cry double standard. Plouffe, after all, has made hundreds of thousands of dollars advising corporate clients like Boeing and G.E., and he once gave a speech in Azerbaijan underwritten by a group closely aligned with the country’s dictator.4 Gibbs served as a semi-official spokesman for the Obama campaign last year while commanding jaw-dropping speaking fees from corporations no doubt keen to influence the White House. (Gibbs says there’s a difference between handicapping the presidential race and “advising groups who oppose the president and first lady’s top priorities.”) Dunn’s defenders also note that she was successful for decades before advising Obama, unlike some of the newly minted “Obama millionaires.”

Because of all the angst these exit strategies pose, many aides look longingly at the handful of industries where you can make a small fortune while still passing as virtuous—a kind of holy grail of post-Obama buckraking. Near the top of the list are the tech-consulting firms, like Blue State Digital, that help clients master social media, wage online marketing campaigns, and generally leverage Big Data. “They all say, ‘I was the real guy’ ” behind Obama’s new media operation, says a former administration official.

Not far behind are huge tech companies like Twitter and Facebook. (The latter approached Gibbs about helping to oversee its communications in 2011 but never offered him the job.) There’s also the entertainment industry, which is “a for-profit corporate space that’s a safe area for Democrats,” says a former White House staffer. “You can go work for Harvey Weinstein and make all this money.” Obama aide Michael Strautmanis recently left to help oversee “corporate citizenship” at Disney, and Jim Gilio, a White House spokesman, now represents talent at a Los Angeles entertainment law firm.

But easily the most protected of protected zones is a newly launched outfit called Organizing for Action (OFA)—essentially the post-election home of the Obama campaign. The idea behind OFA is to build support for the president’s legislative agenda using campaign tools like grassroots organizing, polling, and advertising. It is run by Messina and a veteran Obama field operative named Jon Carson, it raises money from Obama donors (except without the annoyance of campaign finance rules), and it houses the extensive databases and e-mail lists the Obama campaign mined to great effect in 2012. Gibbs and Cutter serve on its board, while Plouffe is an adviser.

Getty Images

ROBERT GIBBS

Formerly: White House press secretaryCurrently: Board member of Organizing for Action. Launching a consulting firm.

OFA made a dodgy first impression over the unlimited sums it could raise from deep-pocketed donors, earning itself a scathing New York Times editorial and the annoyance of the president. “There’s only one paper the president reads, that’s The New York Times,” says a former Obama adviser. (Messina has promised to disclose all donors who give $250 or more and reject money from corporations and lobbyists.) Still, OFA raised millions in the first quarter of this year, and it has all the makings of a gravy train, given the money it’s likely to spend outsourcing campaign-style business to consultancies, including the firms of its board members.

Earlier this month, I contacted Jim Margolis, one of the president’s top ad men, to ask what he made of his former colleagues’ career choices. Margolis, who has run his own consulting business for the better part of 30 years, had a paternal and at times world-weary affect while we discussed the firms they were starting and the challenges they would face. Just as the conversation was ending, I offhandedly asked about OFA, and his voiced perked up. Here was a place that could pay top-dollar and wouldn’t damage his reputation among Democrats. “Let me say this,” he told me excitedly, “I hope we’re doing some work for Organizing for Action!”

1

Another principal at the firm, Barry Johnson, led an Obama White House initiative to gin up foreign investment in this country. He will advise foreign clients interested in acquiring U.S companies and building U.S. facilities, some of which requires government approval.

2

In an email, Sosnik writes: “When I left the White House I realized that most institutions in this town (law firms, p.r. firms, etc.) were all built on a broken business model which forced people to pay for all kinds of overhead that they did not want or need as part of the fee that they were paying.”

3

Vietor says he and Favreau haven’t settled on the precise range of services they’ll offer clients but that many clients will have no business with the White House.

4

Plouffe subsequently donated his fee from the Azerbaijani speech to pro-democracy activists.